Report says slower demand will end city's soaring price increases

While the days of double-digit house-price increases may be over, analysts are still expecting the Winnipeg market to hold its own.

A new report from Royal LePage is predicting a one per cent rise as demand weakens, while Canada Mortgage and Housing Corp. is expecting increases closer to four per cent.

Royal LePage regularly tracks house-price changes in Canada's major cities for three types of homes -- detached bungalows, standard two-storeys and standard condominiums -- and releases the results in its quarterly House Prices Survey report.

In its latest report released on Tuesday, the firm said after seeing the average selling price for some types of homes escalate by as much as 9.9 per cent in the past 12 months, Winnipeggers are looking at an overall price hike of only one per cent for 2013 as the demand for homes softens.

Winnipeg Realtors said the last time Winnipeggers saw that small of an increase in the average selling price of a single-family, detached home -- the only type of home it calculates average selling prices for -- was 1999.

And while WR's residential-market analyst won't be releasing his 2013 forecast until next Wednesday, Peter Squire said Tuesday his initial thought is the Royal LePage forecast is too conservative.

Squire noted Winnipeg has enjoyed 17 straight years of rising house prices, including double-digit gains in seven of the eight years between 2003 and 2010, a six per cent increase in 2011 and a five per cent hike in 2012.

"We've had a good run," he said, "and I'm certainly not ready to declare it over."

CMHC also has higher expectations. In its most recent forecast, it predicted a 3.9 per cent increase in the average selling price of an existing home in Winnipeg this year.

The local spokesman for Royal LePage -- Rick Preston, of Royal LePage Dynamic Real Estate Services -- admitted the firm's forecast is conservative. But it's based on the belief the demand for resale homes is going to soften in 2013, which would ease the upward pressure on prices.

Preston said strong demand, coupled with a chronic shortage of listings, helped to fuel the recent string of hefty price hikes. But with the influx of immigrants expected to slow this year, and with some first-time buyers still relegated to the sidelines because of last summer's tightening of mortgage lending rules, the demand for housing isn't expected to be as strong this year, he said.

Accordingly, Royal LePage is also forecasting a 1.2 per cent decline in unit sales this year in Winnipeg.

"But you have to remember, we're saying a 1.2 per cent decline from 2012, which was the No. 3 all-time year (for MLS sales in the greater Winnipeg area)," he said. "So that would probably make it (2013) the No. 4 all-time year, which is not much of a negative."

Royal LePage said Winnipeg saw average-price increases of between 4.7 per cent and 9.9 per cent from the fourth quarter of 2011 to the final quarter of 2012.

It said bungalows led the charge, with the average selling price jumping by 9.9 per cent to $304,157. Condominiums were second, climbing by 8.3 per cent to $192,062. And two-storeys brought up the rear, with a year-over-year gain of 4.7 per cent to $320,226.

Preston said bungalows and condos saw the biggest increases because there's a strong demand for those types of homes. First-time buyers like them because they tend to be more affordable than most two-storey homes, and they're popular with baby boomers looking to downsize or seeking a lifestyle change.

Nationally, Royal LePage said average selling prices rose by between two per cent and four per cent between the fourth quarter of 2011 and the final quarter of 2012. Two-storey homes saw the biggest gain, climbing by four per cent to $390,444, followed by bungalows -- up 3.6 per cent to $356,790, and condos -- up two per cent to $239,374.

AVERAGE selling prices are still climbing in Winnipeg, according to the latest house-price survey by Royal LePage. Here is a breakdown of average selling prices in the fourth quarter of last year, with the percentage increase over a year ago in brackets:

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